Cisco Small Business Problem Solver Guide To Financing Technology Purchases

Transcription

1 Cisco Small Business Problem Solver Guide To Financing Technology Purchases

2 You ll have noticed by now there is a financial crunch on. But this doesn t mean business investments have to stop altogether. Tight finances offer the opportunity to scrutinise every area of your cash flow and expenditure and to ask just how hard it s working for you. One area in which many organisations can make their expenditure more productive is technology. Whether you need to replace an out-of-date system or want to invest in something new that will save your business money, there are a variety of options open to businesses that need to spend on technology.

3 1. FORMS OF BUYING The first thing any small business needs to understand is the most common forms of buying items. Cash: If you have money in the bank then of course you can simply buy what you need but even then you need to think through whether a straight financial transaction is your best option. Once the transaction is done, will your supplier continue to have a vested interest in how your business will benefit from the technology? Does it leave you starting the whole process again when it comes to upgrades, or will the supplier help? These factors might make it wise to look at an arrangement other than a straight cash purchase. Leasing/rental: The advantage of sourcing equipment and infrastructure through a leasing arrangement is the leasing company and the supplier both have a vested interest in the success of the project. It is possible to build in upgrades and plan for the future as your needs change and your business grows. It won t work for everybody you ll need some sort of trading record or credit references, for example. But in terms of attaching some sort of vision to your IT, this can be a very attractive option. Bank loan/overdraft: The same as cash without the advantage of it being a one off transaction. Interest rates are low but we don t know how long they will stay at current levels.

4 2. STRATEGIC SPENDING Often, a better way of funding technology purchases is to regard them as an investment rather than a simple cost. In this way you will automatically be thinking of getting some sort of return, which wouldn t be the case if you were planning a straight purchase and borrowing or saving the cash to do it. Things need to happen before a technology purchase can be truly part of a company strategy, though: You need to define an aim what exactly is the new technology supposed to deliver that wasn t happening before? By this stage, many business managers heads will be spinning at the thought of the possible complexity. But keep these thoughts in mind: Look at the problem your new IT purchase is trying to solve for you. Not just we need to refresh our IT but we need to refresh our IT because it needs to do something specific. You can now tailor your order to your business needs. Make your decision on value rather than on price. A cheap system that replicates your current business practice might be less useful to you than something apparently more costly but which might allow you to become more productive. Your staff need to buy into the idea of change; You need to select the right technology; You need to deploy it correctly, with a view to upgrading when further business related enhancements become available.

5 3. FIND THE RIGHT PARTNER Clearly one approach is to get in touch with a trusted partner who can help navigate the complexity of acquiring technology. Here are some thoughts to help: One way of doing this is by going through a reseller who has been trained and accredited, preferably someone who understands your industry. You run an independent cinema? Talk to someone who really understands ticketing. You run a holiday company? Talk to someone who really understands linking the different elements of flight, hotel and leisure experience together. The other partner that can help a great deal is the financial partner. Having someone who understands leasing and financial arrangements and has insight into linking the elements of a technology installation together can be indispensable for many businesses. This is why a financial arrangement, not only backed by a major IT and communications supplier, but managed by people with expertise in both camps will benefit a business because it can be flexible in both areas. Leasing rather than owning systems has benefits beyond financial flexibility. It can offer technical help as well; get a leasing agreement written so that it includes a technology refresh option and offers upgrades when they become available rather than when you have saved up or negotiated a fresh loan. All of this is open to you when you adopt a partnership approach in this way; standing on the experts shoulders is a lot simpler than running the whole thing yourself armed with only cash.

6 4. WHAT YOU NEED TO KNOW ABOUT LEASING Leasing is a flexible option that allows you to buy what you need and when. It offers a number of benefits. The Cisco Capital EasyLease scheme offers the following*: Fixed contractual payments with no need for massive cash sums up front. Cisco operates EasyLease through its channel partners. Initially you can contact us through our website at: business/services/index.html Freeing up of your working capital. Various options at the end of the lease buy the equipment, trade up, return the equipment. Financing a total solution rather than elements of it. 5. OTHER SOURCES OF FINANCE It would be wrong to push one option without acknowledging other sources of finances. Consider also: EU and national stimulus plans if you offer employment in a deprived area you might well be entitled to funds. There are other options such as selling some shares in your organisation; this is a major step and ideally shouldn t be done unless there is a business imperative other than buying some technology. Government Grants are available for some industries and areas. But be warned they get a lot of companies walking in through the door and asking is there a grant available? without thinking through why there might be. * Terms and conditions apply. Not available in all countries

7 6. BE FINANCE FRIENDLY If you want to get financing either from the banks or a leasing organisation then remember the same rules that apply to individuals will apply to a business: Demonstrate the need for extra money through a business plan. Have your books fully up to date. All of this becomes simpler when you can talk to a suitably qualified third party partner about your business and its needs. Be strategic rather than reactive and your technology should enhance your business rather than weigh it down. Good luck! Be low on credit elsewhere if you re not, look at alternatives. Demonstrate that the systems you wish to buy are part of along term plan rather than plugging a gap.

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